Gatineau-based Agrisoma Biosciences said this week that it’s signed a long-term agreement with biorefiner UPM of Finland to produce renewable fuels in South America.

The carinata oilseed crop, developed in Canada, will be grown as a second crop in winter by farmers in Uruguay, followed by Brazil and Argentina. It can be used to produce non-edible oil suitable for low-carbon biofuels and a protein for animal feed.

"We're on a growth trajectory where we can see really being a major feedstock for things like the aviation industry," said Agrisoma CEO Steve Fabijanski.

Less than five per cent of flights are flown using biofuel blended with traditional jet fuel. Fabijanski said the use of biofuels will increase as costs decrease and new fuel distribution hubs beyond Los Angeles and Oslo are developed.

Agrisoma said carinata produced under these second cropping procedures provides finished fuels with a greenhouse gas reduction of more than 75 per cent over fossil fuels. Agrisoma added it believes that emission reductions of more than 100 per cent will ultimately be possible, providing for "carbon negative" fuels that are priced competitively with fossil fuels.

Agrisoma made the announcement this week at a prominent global biotechnology conference being held in Montreal.

Speaking at the conference, the country's top airlines said resource-rich Canada has the potential to become a biofuel superpower by transforming forest residue and agricultural crops into energy that can help the industry reduce greenhouse gas emissions.

"Canada actually has an opportunity like no other country where it can displace large amounts of fuel and reduce large amounts of carbon," Mena Salib, Air Canada's manager of aircraft noise and emissions.

Salib said the industry wants to procure biofuels from local sources instead of transporting it far to meet demand.

"The prize would be technology from Canada, the feedstock is from Canada and it is used by Canadians."

The country's largest airline has been part of several flight tests to study biofuels and is ready to add the lower carbon energy blends when they are readily available.

The aviation industry is looking for ways to cut its environmental footprint and achieve the global goal of becoming carbon neutral after 2020 and to halve net emissions by 2050 compared to 2005.

While Air Canada (TSX:AC) and WestJet (TSX:WJA) don't have a preference for using farm crops, forest residue or consumer waste, the airlines say the inputs must be sustainable and not displace food or land.

Costs would also have to come down by using government incentives to encourage companies to boost supply.

Geoffrey Tauvette, WestJet's director of fuel and environment, says while the airline has invested heavily to improve the efficiency of its aircraft, biofuels are the only way to reduce emissions enough to meet global targets.

"We think that Canada has the right ingredients to be that superpower. We just need to get the right sort of instruments in place to be able to make that happen," he said from Calgary.

While the airline hasn't tested the use of biofuels, it has supported efforts, for example, to study turning forestry residue to energy.

"If we can get the biofuels, it does help WestJet meet our goal of connecting Canadians to the rest of the world and we can do that without impacting the environment."

Fernando Preto, a research scientist with the Natural Resources Canada's Canmet Energy group, said there are huge opportunities for Canada to supply biofuels from different sources.

Studies conducted at the University of British Columbia and in La Tuque, Que., are looking at using forest residue to produce green fuel.

Preto said millions of tonnes of branches, bark and scraps left behind during the cutting process could be a valuable resource.

"I think that it could easily meet the jet fuel requirements in Canada for the Canadian industry," he said.

Biotechnology is a US$200 billion a year global industry, with about 20 per cent directed to fuels and much of the rest to consumer products, says Paul Winters, spokesman for the Biotechnology Innovation Organization which hosted the annual conference.